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Do Hedge Funds Love Mercadolibre Inc (MELI)?

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  • MELI

In this article we will analyze whether Mercadolibre Inc (NASDAQ:MELI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Mercadolibre Inc (NASDAQ:MELI) has seen a decrease in hedge fund interest lately. Mercadolibre Inc (NASDAQ:MELI) was in 68 hedge funds' portfolios at the end of September. The all time high for this statistic is 81. Our calculations also showed that MELI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Now we're going to go over the fresh hedge fund action surrounding Mercadolibre Inc (NASDAQ:MELI).

Richard Driehaus of Driehaus Capital

Do Hedge Funds Think MELI Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 68 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in MELI over the last 25 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Alkeon Capital Management, managed by Panayotis Takis Sparaggis, holds the most valuable position in Mercadolibre Inc (NASDAQ:MELI). Alkeon Capital Management has a $747.6 million position in the stock, comprising 1.3% of its 13F portfolio. On Alkeon Capital Management's heels is Citadel Investment Group, led by Ken Griffin, holding a $480.1 million call position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers that are bullish contain D. E. Shaw's D E Shaw, Ken Fisher's Fisher Asset Management and Eashwar Krishnan's Tybourne Capital Management. In terms of the portfolio weights assigned to each position Prince Street Capital Management allocated the biggest weight to Mercadolibre Inc (NASDAQ:MELI), around 16.51% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, designating 12.81 percent of its 13F equity portfolio to MELI.

Because Mercadolibre Inc (NASDAQ:MELI) has witnessed falling interest from hedge fund managers, it's easy to see that there was a specific group of fund managers that decided to sell off their full holdings heading into Q4. Intriguingly, Nitin Saigal and Dan Jacobs's Kora Management dumped the largest investment of the "upper crust" of funds monitored by Insider Monkey, worth about $55.3 million in stock. Sanjay Venkat's fund, Jeneq Management, also dropped its stock, about $40.3 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q4.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Mercadolibre Inc (NASDAQ:MELI) but similarly valued. These stocks are Blackstone Inc. (NYSE:BX), The PNC Financial Services Group Inc. (NYSE:PNC), Equinor ASA (NYSE:EQNR), Canadian National Railway Company (NYSE:CNI), Mondelez International Inc (NASDAQ:MDLZ), British American Tobacco plc (NYSE:BTI), and Enbridge Inc (NYSE:ENB). This group of stocks' market values match MELI's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BX,54,2545773,0 PNC,41,506241,3 EQNR,11,163324,0 CNI,42,7392349,2 MDLZ,46,1922079,-7 BTI,9,724383,-3 ENB,24,211478,5 Average,32.4,1923661,0 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 32.4 hedge funds with bullish positions and the average amount invested in these stocks was $1924 million. That figure was $4371 million in MELI's case. Blackstone Inc. (NYSE:BX) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Mercadolibre Inc (NASDAQ:MELI) is more popular among hedge funds. Our overall hedge fund sentiment score for MELI is 74.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Unfortunately MELI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on MELI were disappointed as the stock returned -29.2% since the end of the third quarter (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.